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The premature and unexpected cancellation of the Federal Govt's Broadband Connect Program has forced Internode to suspend its regional broadband rollout.

Federal Chop Forces a Halt to Regional Broadband Rollout

13-03-2007

The premature and unexpected cancellation of the Federal
Government's Broadband Connect Incentive Program has forced broadband
trailblazer Internode to suspend its regional broadband rollout.

During
the past three years, Internode has used the Federal Broadband Connect
Program to assist with its substantial investment in building broadband
infrastructure in regional Australia. Without these per-customer
subsidies, delivering broadband in rural areas is commercially unviable.

Last
week, the Federal Department of Communications Information Technology
and the Arts (DCITA) announced that, from April 2007, its new
Australian Broadband Guarantee initiative would replace the Broadband
Connect Incentive Program, which was previously scheduled to run until
June 30, 2007.

As a result of the program's premature
cancellation, Internode has suspended all new installations of
broadband services for which Broadband Connect rebates were previously
applicable.

This means that Internode will install no
new Wireless DSL services and that all its ADSL services will be
available only at list prices, with no applicable Broadband Connect
subsidy. Internode has also halted all physical work on network
construction in Broadband Connect areas serviced by the company.
Another result of the program's cancellation is that Internode has
withdrawn its entry-level $29.95 broadband plan which was retained
until now in order to make broadband more affordable for regional
customers.

Internode is a national company that
delivers broadband services to customers Australia-wide, the vast
majority of whom live in high density metropolitan areas. However,
Internode has also been a pioneer in the deployment of sustainable
regional broadband services since the year 2000. During the past few
years, Internode has delivered broadband services in regional Australia
by using the Broadband Connect subsidy program to ensure a predictable
return on its investment.

Internode Managing Director Simon Hackett said Internode regretted the need to take this action. " It has been forced upon us by the unexpected and premature end of the DCITA Broadband Connect subsidy program," he said.

"A
newly-announced program, called the Australian Broadband Guarantee, may
allow us to re-commence new service installations in the future.
However, at this time, substantial apparent flaws in the announced
scheme must be addressed by DCITA before that scheme will be a viable
mechanism with which we could re-start delivering our pioneering
broadband services in regional Australia."

"In
good faith, Internode has made a multi-million-dollar investment to
deliver broadband services in regional areas. The return on these
investments was always going to be long-term. However, DCITA's decision
to cancel the Broadband Connect subsidy program prematurely has
stranded these existing investments, which are now mired in uncertainty
regarding their eligibility under the new scheme, and forced us to
abandon many additional intended investments."

"We
expect to explore ways to address that stranded investment with DCITA,
along with an inadequate proposed subsidy level for terrestrial
wireless services, as part of assisting them to address these and other
flaws we have already identified in the Australian Broadband Guarantee.
In the meantime, we have no choice but to suspend all new installations
of regional wireless DSL services."

"We are
deeply saddened that the regional communities we have worked so hard to
advantage with metropolitan-equivalent broadband now have to suffer
while the industry resolves these shortcomings with DCITA. Clearly
access to affordable broadband services for the whole regional
community in the next 12-18 months hangs in the balance."